Top tips on protecting your capital allowances from the outset

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How do you protect your capital allowances position?

In last week’s insight we demonstrated that without fully investigating a property acquisition, a potentially significant cash benefit could be missed and remain, with the legislation as it stands, irrevocable. So how do you ensure that you don’t miss out?

In a nutshell, ask questions and delve into the detail, and don’t be put off if your seller is adamant that there are no allowances. Here are our top tips:

Once the Heads of Terms are agreed and your lawyer proceeds to carry out the legal aspects of the transaction, you should in parallel ask that they instruct a specialist capital allowances advisor – or you can start this process yourself.

The first piece of the puzzle arrives by way of the replies to CPSEs; at this stage you don’t necessarily have to take these answers as a given but as your investigation develops, these may add substance to the overall basis for entitlement.

It is then imperative to determine the historical ownership of the property. We use a variety of tools and databases for this purpose, but for most the Land Registry will provide much of the information about the prior owner.

Look at the historical ownership alongside significant changes in legislation – for instance the introduction of integral features in April 2008 and the practical limit for understanding the historical ownership of a property in July 1996.

Finally, once you have identified the prior owners that may have had an entitlement to claim, confirmation is needed in terms of what happened with any capital allowances during their period of ownership.

This may sound like a lengthy process, but it usually takes less time than the legal process and, crucially, is carried out in time for the inclusion of the relevant clauses needed to retain identified allowances in the draft contracts.